After Lethal Crash, Quebec's Lac-Mégantic Fears Return of Oil Trains

LAC-MÉGANTIC, Quebec—A year after an oil-train explosion killed 47 people in this small town, residents are waking up to a new reality: The oil trains are probably coming back.

That upsets many of the town's 6,000 residents, who lost family, friends and neighbors when a 74-car train carrying crude derailed in the early morning of July 6.

But Lac-Mégantic probably has no choice. In mid-June, trains carrying nonhazardous cargo began travel through town on rebuilt track eastbound to the U.S. In all likelihood, service including crude will resume in January 2016, when a moratorium on carrying it through town expires. Lac-Mégantic wants to build an 8-mile-long detour to skirt the town and still serve regional businesses. But the chance that it will be finished in time is slim, if it gets built at all.

The railroad's new chief executive is less blunt but says carrying crude is crucial for CM&Q. New York hedge fund Fortress Investment Group FIG +0.27% LLC last month acquired the Canadian assets of Montreal, Maine and Atlantic Railway Inc. out of bankruptcy following last year's accident. Fortress renamed the railroad and put in charge John Giles, who had turned around a previous investment for the fund, RailAmerica Inc.

Residents are rallying around the proposed rail detour at an estimated cost of nearly US$150 million. The most optimistic forecasts are that it could be completed about six months after the moratorium expires—assuming the project could be approved and get financing. But there isn't a firm timetable or financial commitment in place. Despite a potential detour route, some residents aren't swayed by the railroad's role in the local economy. In May, 47 residents lay across the town's tracks objecting to the return of oil trains.